Colorado Ranks 49th in State Higher Education Funding

August 19, 2015

I was on campus at Colorado State University in Pueblo yesterday and had the privilege of listening to President Lesley DiMare and Provost Rick Kreminski describe and explain the University’s budget environment. As part of the discussion Dr. Kreminski shared data on higher education funding by State.

I was absolutely shocked to learn that Colorado is one of the very stingiest states in the US when it comes to funding for public colleges and universities. Dr. Kreminski said Colorado ranked behind 47 States with only New Hampshire and Massachusetts contributing less per student. I Googled “higher education funding by state” and found this page on the collegeboard.org website:

This page contains similar data (maybe it’s a year older) but Colorado fares even worse here, ranking 49th out of 50 states in higher ed funding. And it’s not that all states contribute about the same with Colorado just a bit below the others. Colorado spends a fraction of what most States spend per student. It’s ridiculous and shameful.

Let’s look at our neighborhood in the Mountain West/Southwest/Plains region. Colorado borders six states: Kansas, Nebraska, New Mexico, Oklahoma, Utah and Wyoming. Here are data for these six states and Colorado.

State

Funding Per Public FTE Student

Funding Per $1,000 in Personal Income

Wyoming

$14,045

$11.92

New Mexico

$8,751

$11.51

Nebraska

$8,821

$8.07

Utah

$6,535

$7.63

Oklahoma

$7,164

$6.52

Kansas

$5,690

$6.06

Colorado

$3,494

$2.78

Can you believe that? Dead last. And not even close.

For every dollar the State of Wyoming gives to higher ed per student, in Colorado we contribute a pathetic $0.25.

Why is this? What political force has lobbied for budget policy whereby we contribute less than half per student than the citizens of Alabama or Mississippi? Do we really consider higher education to be so unimportant in Colorado?

I don’t think so. I don’t think Colorado residents are aware of this disparity. And if voters became aware, I think they’d be outraged. I am.

Justin

Justin Holman is CEO of Aftermarket Analytics, where he leads efforts to develop cutting edge sales forecasting and inventory optimization technology for the Automotive Aftermarket. Prior to joining Aftermarket Analytics, Justin managed corporate consulting for the Strategy & Analytics division at MapInfo Corporation, leading major projects for retail clients including The Home Depot, Darden Restaurants, Bridgestone-Firestone, Sainsbury’s and New York & Company. Before that, Justin served as Vice President of Software Development at LogicTools, now part of IBM's supply chain application software group. Justin holds a B.A. from Claremont McKenna College, a Ph.D. from the University of Oregon and an Executive Management certificate from Northwestern University's Kellogg School of Management.

14 Comments

Color me dubious: there are dozens of these different studies and all of them purport to show that some particular state or other doesn’t spend enough on higher education. The higher ed establishment then gets to take that study to the state legislature and demand more money. I’ll take these studies more seriously when we start hearing about other studies that show states spending too much on higher education, but I’m not holding my breath.

By way of comparison, here’s a study that suggests that students graduating from public universities in Colorado rank a mere 36th in average student debt and proportion of students who incur debt — nearly the bottom quartile. Not bad for an “underfunded” university system. Unfortunately CSU Pueblo students were on the high end of the debt chart for the state.

Hi John,
There are dozens of studies? This isn’t a “study”, it’s simple addition and division. Add up State funding and divide by personal income or number of full time students. Are you suggesting the funding level data are fabricated?
Best,
Justin

What I’m getting at is that there are several different ways of evaluating to what degree state legislatures are funding education, including higher education, and all of them seem to produce different results. For instance, the study you quote seems to deal in dollars appropriated by state legislatures relative to state incomes, but that doesn’t necessarily give us a comparison of higher education dollars as an overall percentage of that state’s budget. It maybe that Wyoming can spend a lot of money on higher education because they aren’t spending tax dollars on other public initiatives like building transportation systems or expanding access to health care.

It also doesn’t give us a picture of what the overall financial burden is on in-state students. For instance, a state may not be spending a great deal on the universities, but perhaps the ability of a public university system to raise outside money is helping to keep in-state tuition relatively low. How about states like Colorado and California whose universities are highly sought-after by out-of-state students and can thus charge a higher tuition to nonresidents which helps subsidize the tuition of residents? According to a list that I found here, despite ranking 49th in state funding (by the metric you uncovered), Colorado only has the 19th highest in-state tuition. Contrast that with California which provides the 14th highest subsidies by state, yet still has the 20th highest average tuition for public universities.

And even if it is true that many state legislatures are “under-funding” higher education (at least by the standards of the higher education lobby), I can’t say that I completely blame them. While my state’s higher education administrators go hat in hand to the California legislature to beg for more money, it’s pretty widely acknowledged on all sides that administrative bloat accounts for way too much of the overall budget of California colleges, and that these administrative costs have exploded over the last quarter century. I don’t blame any state for saying no more funding increases until the university systems prove they can be responsible stewards of the taxpayer’s funding. If I were a citizen of Illinois I would be wondering why my state ranks number five in the amount of taxpayer funding provided to public universities yet somehow still has the fifth highest average in-state tuition among all of the states. But since it is Illinois we already know that the answer is likely graft, fraud, and misappropriation.

Yes, there are different ways to look at it. But these metrics, $ per full time student and $ per $1,000 personal income, are meant specifically to level the field and facilitate comparison.

At the end of the day, the typical US State spends over $7,000 per college student and Colorado spends less than $3,500. That’s a losing long term economic strategy.

Your notion that “university systems prove they can be responsible stewards of taxpayer funding” is absurd. What have they done wrong? American Universities are the envy of the rest of the world. US-based University research scientists are making incredible strides despite inane efforts to cut basic research funding. And, more than at any other time in history, Universities are the most reliable ticket to prosperity for low and middle income Americans who can no longer find a decent job after high school.

The only fraud and misappropriation I’m certain exists is the right-wing propaganda machine and its deplorable efforts to discredit science and education. Sadly, you seem to be one of its many victims.

Oh, Justin, Justin, Justin: U.S. universities are “the envy of the world” largely because of the wealthy private colleges and some flagship state universities, not because we have the lowest college completion rate among the developed world (I”m citing a left-wing source so that you take it seriously). What have they done wrong? Apart from the administrative bloat that I cited earlier, the New York Reserve Bank has a study suggesting that providing more money for federal Pell Grants has had the perverse effect of encouraging colleges to continue to raise tuition, an assertion that other researchers have also corroborated. Should we compromise on more state support of public universities in return for a dollar-for-dollar reduction in tuition and a five-year freeze paid for by cutting administrative positions and unproductive academic programs?

Here’s a paper that points out that today’s college graduates are facing sad job prospects due to an ongoing “weak demand for goods and services, which makes it unnecessary for employers to significantly ramp up hiring.” Given that, and given the fact that so many graduates with bachelors degrees are doing jobs that don’t require a college degree, how do we justify continuing to throw money to churn out college graduates? Is higher education so sacrosanct that they can’t be subject to belt-tightening in difficult economic times?

You overstate the importance of wealthy private colleges. Only 38 of the 108 R1 Universities are private (https://en.wikipedia.org/wiki/List_of_research_universities_in_the_United_States). Administrative bloat is subjective and variable. Universities do require management and I wouldn’t be surprised if they’re significantly less bloated than the typical bank or insurance company. It’s not that easy to run a high quality University.

Completion rates, Pell Grants and job prospects for young people are all important but separate issues.

I’m not saying higher ed is sacrosanct and immune from the ebb and flow of economic cycles. I guarantee you public colleges and universities have done significant belt tightening in the past decade. I’m asking why would Colorado invest less than half the national average on something as critical to the economy as a robust higher education system?

Ask yourself this – how important are CU-Boulder and CSU-Fort Collins to the Denver Metro regional economy? If these two Universities become weaker over time relative to other major/flagship State Universities how will Denver’s tech-related industries fare compared to other regional tech capitals?

John, Over the last 25 years or so, the budgets for higher ed. and corrections have basically flip-flopped in Colorado. We don’t need to know that Colorado is 49th in higher ed. funding to know that for the last 30-40 years it’s been all about appearing tough on crime, whether being tough on crime makes sense or not, to hell with the cost. It’s why Colorado is 49th in higher ed. funding; it coincides with being near the top in the incarceration rate. It’s why we have horrible roads in Colorado–all the money went to locking up as many people as possible, for as long as possible. Republicans have tons of nifty schemes. All of them cost a fortune, and none of them make us any better off.

John, how many kids leave college with debt is mostly separate from higher ed. funding. But according to your theory there should be 50 reports showing all 50 states at or near the bottom in higher ed. funding. But there isn’t. Why? Because they don’t exist, which is why we know that you don’t know the first thing about how government works.

Hi Justin,
I wanted to weigh in on this as well. At first blush, CO under-funding higher ed seems like a problem. But to interpret meaning from that statistic, it has to be compared with other metrics.

To my mind, the biggest problem in higher education is the ballooning cost. My guess is that because CO state government isn’t funding higher ed, colleges aren’t spending money on wasteful/extravagant projects like new facilities that cost a ton and transfer into higher tuition rates for students. Essentially, the lack of available capital forces the universities to keep tuition inflation down. I don’t think the state subsidies are wasted due to administrative bloat. I know that building and maintaining facilities is incredibly expensive. So if schools are competing for students with new gymnasiums and student centers, that cost is going into rising tuition rates. (Borrowed thoughts from a Mark Cuban article you posted a while back.)

College degrees are and should continue to be important. My main concern is how do we keep them affordable for middle class folks? The grants and loans that were originally designed to help students afford school seem to have just floated the tuition cost higher, because schools know how much capital students can get.

These thoughts are all macro-level and your initial post was focused on your university. My question to you is, what are the results of this funding gap? Are students missing out on serious educational resources? Is the university unable to attract top talent? Or is the tuition reasonable for students but maybe they don’t have the swankiest new student center? If taxpayers do want to spend more on higher ed, I’m all for that. But those increases in funding should be contingent on tuition costs staying flat. This limit is not because of a fear of “administrative bloat,” but merely to force schools to be more practical about capital investment projects that end up burdening students with debt for 30 years.

Hi Kristin! Thanks for sharing your thoughts on this. Your question, “What are the results of this funding gap?”, is a good one. And difficult to answer. Near term it means college professors and administrators are frustrated because of pay freezes and lack of resources for new/good ideas. This is a serious challenge because Universities, especially those that lack big time prestige, must innovate in this environment. On the flip side budget shortages are an excellent opportunity to cut loose dead weight and cancel bad programs. Hopefully the administrators accused of bloated pay checks are making good choices when forced to make such decisions. The funny thing is that the University is stuck between a rock and hard place in that the State provides precious little funding but also imposes tuition increase limits. So, while I see your point about making tuition more affordable, limiting State government contributions isn’t helping because there are few places to turn to aside from raising tuition and fees. Funny you raise new construction of facilities as an issue. You’d think these projects would never see the light of day given challenging budget environments but the dollars for these projects always seems to come from different pockets than the funds for regular annual salaries and expenses. I think the construction lobby must have very powerful allies somewhere. But, as you correctly point out, maintaining large new facilities is very expensive. My suspicion is these new expenses hit the regular/annual budget pretty hard but no one has the courage to turn down “free” money so it continues unabated. In any case, I think the current higher ed environment is unsustainable. I remember thinking the same thing about home equity growth and borrowing in 2003 but as everyone knows that bubble didn’t pop until 2008. Who knows when the reckoning will arrive in higher ed. Could be another 5 years. Could be another 20. In the meantime I expect students and parents to bear the brunt of the burden because, politically, they’re the easiest targets. It’s a shame. Good to hear from you! Best, Justin

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